The European Central Bank raised its key interest rate on Thursday and hinted at more to come, the latest sign that it will not be derailed by the debt crisis in its mission to fight inflation, The Associated Press reports.
The bank nevertheless agreed to extend emergency liquidity to Portuguese banks, as it has done with Greece and Ireland, even though one of the major ratings agencies downgraded the country’s bonds to junk status.
Thursday’s quarter point hike, to 1.5 percent, was the second this year and widely expected by markets despite a global slowdown and the debt crisis, which almost caused Greece to default this month.
While acknowledging those risks, Trichet said controlling inflation was the ECB’s main job. His comments reinforced expectations that there will be at least one more interest rate increase this year as the bank tries to get inflation, which is running at 2.7 percent, back under the target of just below 2 percent.
